A Comparative Panel Data Estimation on Technology Spillover Effects of FDI and Import in China

Abstract

By using China's 30 provincial panel data during the period 1996~2002, this paper aims at taking a comparative estimation on technology spillover effects of FDI and import on China's indigenous firms. Our panel data estimation results demonstrate that both FDI and import are major technology spillover sources for China's domestic firms. However, in general technology spillover effect of FDI is more significant than import since their technology spillover mechanism differs essentially, and also technology spillover effects greatly depend on absorptive capability, which is measured by both degree of openness and human capital accumulation